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Pirelli: the Board of Directors approves consolidated financial statements as of 30 September 2011

PIRELLI & C. SPA BOARD APPROVES CONSOLIDATED RESULTS FOR 9 MONTHS TO 30 SEPT 2011:

ALL ECONOMIC INDICATORS IMPROVE DESPITE A MACROECONOMIC CONTEXT SHOWING SIGNS OF SLOWDOWN

INDUSTRIAL PLAN WITH VISION TO 2015 AND UPDATE 2012-2014 TARGETS APPROVED, TO BE PRESENTED TO THE FINANCIAL COMMUNITY TOMORROW IN LONDON

BOARD AUTHORIZES BOND ISSUE OF UP TO 800 MILLION EUROS TO BE LAUNCHED BY THE END OF 2012 ALSO IN SEVERAL TRANCHES, TO TAKE ADVANTAGE OF FINANCING OPPORTUNITIES ON THE MARKET IN SUPPORT OF THE BUSINESS

PIRELLI & C. SPA

  • • REVENUES 4,265.8 MILLION EUROS, +17.9% COMPARED WITH 3,618.7 MILLION EUROS ON 30 SEPT 2010

  • • OPERATING RESULT (EBIT) AFTER RESTRUCTURING CHARGES OF 451.2 MILLION EUROS (+46.8% COMPARED WITH 307.3 MILLION EUROS ON 30 SEPT 2010), WITH PROFITABILITY (EBIT/SALES) RISING TO 10.6% FROM 8.5%

  • • TOTAL CONSOLIDATED NET PROFIT 251.3 MILLION EUROS, +56.8% COMPARED WITH 160.3 MILLION EUROS ON 30 SEPT 2010 (BEFORE DISCONTINUED OPERATIONS); ATTRIBUTABLE CONSOLIDATED NET PROFIT 255.3 MILLION EUROS (COMPARED WITH NEGATIVE 87.0 MILLION EUROS ON 30 SEPT 2010)

  • • INVESTIMENT STOOD AT 396.2 MILLION EUROS ON 30 SEPT 2011 (226.9 MILLION EUROS ON 30 SEPT, 2010), OF WHICH 162.1 MILLION EUROS IN THE THIRD QUARTER (91.5 MILLION EUROS IN THIRD QUARTER 2010)

  • • NET FINANCIAL POSITION NEGATIVE 938.3 MILLION EUROS (704.9 MILLION EUROS ON 30 SEPT 2010)


PIRELLI TYRE

  • • REVENUES 4,225.7 MILLLION EUROS, +18.7% COMPARED WITH 3,559.1 MILLION EUROS ON 30 SEPT 2010

  • • OPERATING RESULT (EBIT) AFTER RESTRUCTURING COSTS 484.4 MILLION EUROS, +44.9%COMPARED WITH 334.3 MILLION EUROS ON 30 SEPT 2010;

PROFITABILITY (EBIT/SALES) AT RECORD LEVEL OF 11.5% (9.4% ON 30 SEPT 2010)

2011 TARGETS

  • • PROFITABILITY EXPECTED AT HIGHER END OF TARGETS ANNOUNCED IN JULY: EBIT MARGIN AFTER RESTRUCTURING CHARGES APPROXIMATELY 10% (TARGET BETWEEN 9.5% AND 10.0%) AT CONSOLIDATED LEVEL AND APPROXIMATELY 11% (TARGET BETWEEN 10% AND 11%)  FOR PIRELLI TYRE, THANKS TO THE POSITIVE EFFECTS OF THE FOCUS ON THE PREMIUM SEGMENT

  • • SALES TARGET REVISED TO BELOW 5.8 BILLION EUROS (FROM “ABOVE 5.85 BILLION EUROS”) AT CONSOLIDATED LEVEL; PIRELLI TYRE REVENUE TARGETS REVISED TO APPROXIMATELY 5.7 BILLION EUROS (FROM “ABOVE 5.8 BILLION EUROS”). THIS RESULT WAS IMPACTED BY:

    - THE NEGATIVE EFFECT OF EXCHANGE RATES ON SALES 1.2% HIGHER (AROUND 70 MILLION EURO) COMPARED WITH PREVIOUS FORECAST

    - VOLUME REDUCTIONS TO APPROX. +3% (PREVIOUS TARGET: “ABOVE +5%”) AS A CONSEQUENCE OF: GREATER PREMIUM GROWTH IN THE PREMIUM SECTOR (+23%) AND REDUCTION OF SALES OF LOWER PROFIT PRODUCTS; THE SLOWDOWN IN TRUCK DEMAND IN THE EMEA REGION

    - PRICE/MIX TARGET IMPROVED FROM 16% TO 18% AS A RESULT OF THE GREATER FOCUS ON PREMIUM

  • • CONSOLIDATED NET FINANCIAL POSITION TARGET CONFIRMED, EXPECTED AT AROUND NEGATIVE 700 MILLION EUROS ESCLUDING RUSSIA INVESTMENT

A meeting of the Board of Directors of Pirelli & C. SpA today reviewed and approved the results of operations for the nine months ended September 30, 2011.

The Pirelli Group saw all economic indicators improve over the period, with revenues growing in the first nine month by 17.9% to 4,265.8 million euros and profitability – understood as the ratio of the operating result to sales – at 10.6%, with an increase of over two percentage points from the 8.5% of the first nine months of 2010. The total consolidated net result for the first nine months was a positive 251.3 million euros, an increase of 56.8% compared with 160.3 million euros, on a like-for-like basis (before discontinued operations) compared with the first nine months of 2010.

For Pirelli Tyre, which represents almost the totality of group sales (99%), the first nine months of 2011 saw a significant increase in sales (+18.7% to 4,225.7 million euros) and a further increase in profitability, with the Ebit margin reaching 11.5% compared with 9.4% in the first nine months of 2010.

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